Relational Says Sovereign Press Release and Sidhu Letter Misleading; Sovereign Fails to Disclose Business Ties and Recent Payments of More Than $20 Million Received by Employer of Author of Article

Relational Investors LLC, the largest shareholder of SovereignBancorp, Inc. (NYSE: SOV), today denounced another recent action bySovereign which Relational believes misleads Sovereign shareholdersand the market. Relational also asked the SEC to investigateSovereign's conduct and order a corrective press release and mailingto Sovereign's shareholders.

On December 15, 2005, Sovereign's chairman and CEO Jay Sidhumailed a "holiday greeting" letter to all Sovereign shareholders inwhich he glowingly directed attention to an enclosed "Viewpoint"opinion article from the December 9, 2005 issue of The AmericanBanker. Mr. Sidhu praised the credentials of the article's author, BenA. Plotkin, the chairman and CEO of investment banking and brokeragefirm Ryan Beck & Co. On December 27, 2005, Sovereign issued a pressrelease seeking to bring further favorable attention to the article.

Ryan Beck's Undisclosed Business Ties

We believe Sovereign is required by securities laws immediately toinform all Sovereign shareholders, and the other market participantsit sought to influence with these communications, that Ryan Beck haslong-standing and multi-faceted business ties with Sovereign. RyanBeck has served as an advisor to Sovereign on several acquisitions, asan advisor to companies acquired by Sovereign, as a primaryunderwriter of Sovereign's preferred capital securities, as a marketmaker for Sovereign's trust preferred securities, and is currently amarket maker for Sovereign's common shares. These business tiesstretch back more than a decade. Just in the last 36 months, Ryan Beckhas received over $20 million from these business ties. Thisinformation was gathered from public records and does not take intoaccount fees and commissions that would not have been subject topublic disclosure requirements. Over $19 million in the last 18 monthsis attributable to serving as an advisor to companies acquired bySovereign and with respect to which Ryan Beck issued fairness opinionsevaluating Sovereign's common stock. Mr. Sidhu, Mr. Plotkin andSovereign have all failed to disclose these material facts.

At the end of Mr. Plotkin's article, it is stated that Ryan Beck"was not involved in the Sovereign transactions but publishes equityresearch on numerous . . . banks, including Sovereign." We understandthis language was provided to The American Banker by Ryan Beck. Mr.Plotkin failed to mention the long-standing business ties between RyanBeck and Sovereign that have resulted in substantial direct andindirect payments to Ryan Beck from Sovereign. This information was,of course, known to Mr. Sidhu, and we believe is material toshareholders' evaluation of the objectivity of the author's"viewpoint" as provided to shareholders in Mr. Sidhu's letter andSovereign's press release. Relational questions whether Mr. Sidhu andSovereign deliberately omitted the information because it couldmaterially detract from the effect they desired from thecommunications.

Relational Comment

Relational principal Ralph Whitworth said, "In this day of deeplyfelt skepticism about motives and ethics, it behooves all of us inAmerican business to 'keep to the high road' and scrupulously avoidputting ourselves and our companies in situations with even theappearance of conflicts. This kind of 'old school' conduct must bemethodically purged from corporate America. We believe Sovereigndesigned these communications to mislead small shareholders, whichmakes its conduct particularly troubling and objectionable. We atRelational, with the help of our advisors, will continue to do all wecan to point out these cynical and self-serving actions to Sovereign'sshareholders. While at this point nothing from Sovereign's playbooksurprises us, it's still unfortunate that the board members, who areresponsible for Mr. Sidhu, refuse to arrest his behavior."

Mr. Plotkin Misstates Shareholder Opposition to the SantanderTransaction

Mr. Plotkin misstates the widespread opposition to Sovereign'sSantander transaction alleging, "Some shareholders don't like theSantander transaction, because it effectively means Sovereign won't beselling out in the short term." He should know the exact opposite istrue. Shareholders oppose the deal because Sovereign's board membersare "selling out" their shareholders by depriving them of both acontrol premium and a vote. Mr. Plotkin also conveniently omits thefact that the analyst community, including analysts at his own firm,has roundly condemned the deal.

Mr. Plotkin Mischaracterizes Relational's Motives

Mr. Plotkin repeats the Sovereign PR machine's oft-stated butnever supported "spin" that Relational is a short-term investorseeking only to sell Sovereign. We ask Mr. Plotkin to point to asingle Relational statement advocating that Sovereign (or any other ofour current or historical portfolio companies) be sold. Tellingly, hedid not provide one fact or figure to square his words with ourinvestment record. He either ignored, or recklessly failed to informhimself, that our typical holding period is six times longer than thatof the average institutional investor, and that only two of ourportfolio companies have ever been acquired, and we did not advocatethe sale of either. We help fix broken, neglected and poorly ledcompanies. Ironically, as his relationship with Sovereign suggests, itis Mr. Plotkin who makes his living selling companies.

Mr. Plotkin's Minimalist Approach to Shareholder Democracy

Mr. Plotkin says, "Putting matters in front of shareholders thatthey are not otherwise entitled to vote on is bad corporate policy."Mr. Plotkin neglects to mention that his view is directly contrary tothe position of the New York Stock Exchange, as well as the views ofcorporate governance experts. First, he must recall that the NYSE, infact, did agree with Relational and Sovereign's shareholders thatSovereign's board could not go forward with the Santander deal as theyoriginally approved it without allowing shareholders to vote. Morefatal to Mr. Plotkin's minimalist opinion of shareholder rights,however, is the NYSE's listed company Rule 312 which expresslyprovides: "Good business practice is frequently the controlling factorin the determination of management to submit a matter to shareholdersfor approval even though neither the law nor the company's chartermakes such approvals necessary. The Exchange encourages this growth incorporate democracy."

Mr. Plotkin Attacks the Media

Apparently unhappy with the financial media's reporting on thewidespread criticism of Sovereign's board and Sovereign's deal withSantander, Mr. Plotkin plays the age old "press bias and ignorance"card and accuses the press of not "being fully aware of what iscustomary and normal in the highly regulated world of banking" andasserts that the coverage in the press has been "one-sided." We notethe media's fair, thorough and expert reporting on these matters andare confident that the press has, in fact, fully understood, and isunderstanding more by the day, the nature of Sovereign's activities.It's what the media DO know, not what they don't know, that shouldtrouble Mr. Plotkin and Sovereign.

About Relational Investors

Relational Investors LLC is a registered investment advisor andasset management firm located in San Diego, California managing $6.1billion. Additional information about Relational is available on theirwebsite at www.rillc.com.

Further Information About Relational's SEC Filings

On October 20, 2005, Relational, together with a number ofaffiliated persons and entities that may be deemed "participants" forpurposes of the solicitation rules of the Securities and ExchangeCommission ("SEC"), filed a preliminary proxy statement on Schedule14A with the SEC relating to a possible solicitation of proxies fromthe shareholders of Sovereign Bancorp, Inc. ("Sovereign") inconnection with Relational's nomination of Ralph Whitworth and DavidBatchelder for election to Sovereign's board of directors atSovereign's 2006 Annual Meeting of shareholders. On December 13, 2005,Relational filed with the SEC a revised preliminary proxy statement.Relational will prepare and file with the SEC a definitive proxystatement relating to their nomination of Messrs. Whitworth andBatchelder and may file other proxy solicitation materials. RELATIONALANTICIPATES THAT IT WILL FURTHER REVISE AND FILE THE PRELIMINARY PROXYSTATEMENT AND SHAREHOLDERS ARE URGED TO READ THE PRELIMINARY PROXYSTATEMENT AS REVISED (AND THE DEFINITIVE PROXY STATEMENT, WHEN ITBECOMES AVAILABLE) BECAUSE IT CONTAINS IMPORTANT INFORMATION REGARDINGRELATIONAL'S NOMINATION OF MESSRS. WHITWORTH AND BATCHELDER FORELECTION AS DIRECTORS. The preliminary proxy statement is, and therevised preliminary proxy statement and the definitive proxy statement(when they become available) will be, available for free atwww.sec.gov, along with any other relevant documents. You may alsoobtain a free copy of the preliminary proxy statement, or thedefinitive proxy statement (when it becomes available), by contactingMaudie Holland of Relational at (858) 704-3321, or by sending an emailto maudie@rillc.com. Information regarding the names, affiliation, andinterests of persons who may be deemed to be participants in oursolicitation of proxies of Sovereign's shareholders is available inthe preliminary proxy statement filed with the SEC on October 20, 2005and the revised preliminary proxy statement filed on December 13,2005.